Swedish Match AB (7.6%) (SWMA, Financial) (SWMA – $57.42/SEK568.00 – Stockholm Stock Exchange) produces tobacco products that include snus and snuff, chewing tobacco, cigars, and lights. The company has been benefiting from the growth of the smokeless tobacco market in both Scandinavia and the U.S., as public smoking bans and health concerns are driving consumers to seek alternative tobacco products to cigarettes. In October 2010, Swedish Match combined its European and premium cigar portfolios with Scandinavian cigar and pipe tobacco company STG, creating a new company that should benefit from enhanced scale and synergies. In February 2016, STG went public via an IPO on the Copenhagen Stock Exchange, with Swedish Match fully exiting its stake by 2017. The company has a tobacco-free nicotine pouch product called ZYN that is growing rapidly in the US and Scandinavia, and is driving growth in its mass market cigar business through its new natural leaf products. In October 2019, the company’s General Snus brand was deemed a modified risk tobacco product (MRTP) by the FDA. We expect Swedish Match to continue to grow its cigar and smokeless business globally, and the company could be an attractive takeover candidate for a global tobacco company that wants to increase its presence in the smokeless segment.
From Mario Gabelli (Trades, Portfolio)'s Gabelli Value 25 Fund first-quarter 2020 shareholder commentary.
